Why you should care

Because outsourcing is going to need an upgrade.

By Justin Higginbottom

The Daily DoseDEC 15 2017

The Philippines has a problem. That huge outsourcing sector (the call centers and the cheap manufacturing) the country’s been banking on? It’s not secure. Technology is changing. And just as it roiled the developed world when all those jobs were lost and gained — another disruption may be coming.

But Stephanie Sy, the 28-year-old founder of the data science company Thinking Machines, is gearing up to meet the challenge. Those buzzwords coming out of Silicon Valley: big data, machine learning and AI (artificial intelligence). She’s been there and knows how they work — and now she’s determined to make them work for the other side of the world.

Growing up in the Philippines, Sy wasn’t sure what she wanted to be. But she gravitated toward the analytical, and when she got into Stanford University, there wasn’t much discussion about whether she’d go. She enrolled, navigated the culture shock, studied management science and engineering, and followed the path of many undergraduates at the “Farm” in the aughts: She got “sucked into tech,” Sy tells OZY.

The outsourcing sector in the Philippines, at $23 billion, has eclipsed India’s.

California turned out to be just the education she needed. After graduating, she joined Wildfire Interactive, helping to create social media platform hubs. There were 10 employees when she arrived in 2010; by the time Google snapped up the company two years later, there were 400. “It was a superexciting ride to be part of,” she recalls.

At Wildfire, as a junior employee, Sy did everything — including product analytics, marketing content, data science work and firefighting when problems flared. But her work got supercharged at Google: Now she had data sets with billions of user sessions, and she was able to make use of machine learning, programming computers to solve problems on their own.

Then in 2013, Sy returned to the Philippines. Sure, her parents had asked her to come home, but there was another reason. “All of our best and brightest move abroad, and very few of them ever come back.” She figured it was the “responsible thing to come back and contribute to society here.”

The Philippines has long suffered from brain drain. Around 10 million Filipinos – a tenth of the population — work overseas, with many professionals attracted by higher wages. “There are not enough talented developers in the Philippines. The ones that are here speak English, which is great, but the best ones tend to move abroad because they speak English,” says Sy.

“All of our best and brightest move abroad, and very few of them ever come back,” Sy says about her decision to return to the Philippines.

The second reason Sy came back? Opportunity. There was little competition in the data science industry in 2013. “The whole point of Thinking Machines is to take innovative data technology from the bleeding edge and make it work for the middle 50 percent of the world,” she says. That includes the Philippines. Her clients are large utility companies and conglomerates that would already have their own data science team if they were located in the U.S.

Not all startups in data science have the capacity to jump-start companies, says Erika Fille Legara, Ph.D., professor of data science at the Asian Institute of Management. But that boost is essential, she continues, as most businesses in the Philippines are “starting from zero” with regard to becoming data-driven. Helping companies start from zero is what excited Niek van Veen, vice president of strategy and operations at Thinking Machines. He joined Sy’s startup because of those “truly transformative projects,” and he wants to create opportunities for young people in data science “to build up their skill set and make an impact.”

While the government works to foster an environment for a Philippine version of Silicon Valley — with a road map targeting 500 local startups valued at $2 billion by 2020 – risks remain. Or rather they don’t, and that’s the problem. “Silicon Valley is special in that people are genuinely OK with failure,” Sy says. “Your parents aren’t going to be ashamed of you.” But Filipino investors, more concerned with profitability than long-term growth, are less willing to risk their money.

Funders may be scarce, but Sy trumpets another benefit to working in the Philippines: Forty percent of senior managers are women, making it the third-highest ranking country in terms of the proportion of women in top management roles. The U.S. comes in at just 23 percent. Sy says she instantly felt the difference after coming home: “It’s great when you are talking to potential clients and almost everyone you talk to is a woman or has worked for a woman decision-maker.”

The Philippines isn’t perfect, she clarifies, but she feels less self-conscious running a business as a woman. And being self-conscious isn’t good for business. “That’s a constant drain on your morale and energy, and you need that to be running a company.”

The outsourcing sector in the Philippines, at $23 billion, has eclipsed India’s. But its comparative advantage of cheap labor is threatened by cheaper alternatives of automation and AI. Aside from the call centers, the country’s manufacturing industries will also be affected by what Legara says is the “advent of the fourth Industrial Revolution.”

Sy’s company is fully engaged in helping redesign the country’s economy to adapt to this new AI age. Her answer? Human augmentation. For example, imagine that instead of replacing people at call centers with AI technology or automation, you augment the humans — supercharge them — to be more productive. Rather than reading off a script, a worker could manage 300 people using new AI technology, telling them what to do in every situation, while still providing that emotive connection that makes them valuable.

“We are more motivated than any other nation to figure out how augmented human outsourcing is going to work,” says Sy. “We have to. If we don’t figure it out, we are in serious trouble.”